Bust bureaucracy

31 October, 2016

The risks of increased complexity, and six ways to stay nimble and innovative

In 1988, Peter Drucker predicted that in two decades, the typical organisation would become far more agile and efficient, trimming the layers as well as numbers of managerial staff. Which just goes to show that even “the founder of modern management” couldn’t be sure what the future would hold! Far from shrinking, bureaucracy has instead grown dramatically. In the US, for instance, the managerial workforce has grown by more than 90 percent from 1983 to 2014—compared with only 40 percent in other job categories, according to Gary Hamel and Michele Zanini in their article More of Us Are Working in Big Bureaucratic Organizations than Ever Before.

With fresh issues at every turn—from globalisation and digital, to risk management and CSR—it’s only natural for organisations to create new processes and hire more people to deal with these challenges. However, the risk is that the increased complexity could make companies less agile, more unwieldy and more bureaucratic.

This is exactly what we need to be watchful of at Godrej too. Our Vision 2020 for the Group is to be 10 times our size in 10 years. We are growing fast and are on track to achieve this aspiration. If you look at GCPL alone, we have changed significantly as a business over the last few years, both in scale as well as complexity and composition.

Our competitive advantage has been our agility and our ability to adapt. As we get bigger and leverage the benefits of scale, we need to ensure that we remain nimble and not stifle our growth due to increasing bureaucracy.

So, drawing from this, my message this week is on how to avoid the trappings of bureaucracy.

What exactly is the problem with bureaucracy?

According to a study by Bain & Company, 85 percent of executives believe their greatest challenges lie within their company. Internal obstacles such as lack of agility and creativity—arising from bureaucratic trappings—have tripped up many a big player: like the now popular examples of Nokia, which was unable to keep up with Apple, or Intel’s inability to harness the potential of the mobile phone market.

Here are some thoughts on what it could be doing, closer home, to your team and organisation:

1. It slows you down, causing you to miss opportunities

In a large and complex organisation, decision-making is an arduous process that involves a labyrinth of bureaucratic checkpoints. This hampers speed, getting in the way of harnessing valuable opportunities. By the time a decision is reached, either circumstances have changed (as they often do in today’s market) or someone else has already seized the opportunity. Thus, in the interest of discipline, competitive advantage is sacrificed.

2. It kills productivity

Managers spend an inordinate amount of time writing reports, completing time/cost sheets, and attending meetings. Processes are supposed to simplify work, but too often they end up complicating it. Meetings, for example, are often redundant and time-consuming. How many meetings does it take to make a decision? A McKinsey study found that a third of their respondents need around five to reach an investment decision. Five meetings per decision! Imagine the wasted work-hours and costs.

3. It increases the distance between decision-makers and the front line

As organisations grow and managerial ranks swell, the connection between senior decision-makers and the front line weakens. Intimate product and customer knowledge gives way to spreadsheets and averages, and the valuable wisdom of the front line is often lost as information makes its way up the ladder.

4. It reduces ownership and accountability

With multiplying managerial roles and processes comes decreasing accountability. In a company of 100 people, it’s clear who is in charge of what. But in a company of 10,000? It’s harder to identify who owns which decision and which problem. Along with internal confusion, this lack of ownership also takes a toll on the organisation’s relationship with the outside world—be it vendors, customers, regulators or stakeholders.

5. It makes you inflexible and impedes innovation

Excessive control stands in the way of new ideas and out-of-the-box thinking. . Bureaucracy aims for consistency and conformity, which makes it the natural enemy of creativity. Without the willingness to experiment and (possibly) fail, no organisation can adapt and stay relevant in the long term.

As Lisa Bodel puts it in her article 5 Ways Process is Killing Your Productivity:

‘When people’s jobs depend on meeting metrics and maintaining the status quo, can you fault them for their reluctance to expend any energy toward creation and invention?’

Does some or all of this sound familiar? And what can you do when you’re faced with these challenges?

Here are sixbureaucracy-busting suggestions to get started:

1. Connect with the front line

As leaders, we must make it a priority to strengthen our linkage with the front line, enabling on-the-ground wisdom to inform our decisions. There are a number of ways to battle the bureaucratic disconnect: walk the hallways, spend time on the shop floor, have direct contact with consumers, and get periodic feedback from front-line employees.

2. Delegate decisions

Empower your team members down the line to make more decisions. Not only is this where the nuts-and-bolts knowledge exists, decentralisation of decision-making power is also key to harnessing potential opportunities. A McKinsey report, How to catch those fleeting investment opportunities, highlights what a slow organisation looks like—and how to speed things up:

‘One company in the construction industry illustrates this dynamic. Although its staff has grown to nearly 3,500, every major spending decision still falls to a cadre of just three core executives, which has slowed the company’s progress… More agile companies push decision making closer to those who originate an idea—and who will be responsible for implementing it—and limit the number of meetings and decision makers.’

3. Run fewer, high-impact meetings

Trim the number of meetings while increasing their impact. The benefits of doing so are numerous: faster decisions, enhanced productivity, more time for other work, more engaged participants, and lower costs. As leaders, here’s how we can run more efficient meetings:

Ensure that there is a clear objective, an important decision to be made. If you can’t find one, cancel the meeting—it is clearly a symptom of excess bureaucracy.

Insist on preparation. Send the meeting agenda, duration, and pre-reading materials to all participants—and insist on adherence to these protocols.

Invite essential people only. It is unnecessary for someone to attend a meeting to ‘stay in the loop’—that’s what emails and memos are for. Attendees must have a role to play in the decision-making process.

4. Create transparency

Make it a priority to foster greater transparency within the organisation. Knowledge is the first step towards greater accountability—plus, it empowers your team members to deal with internal red tape more rapidly. It’s also important to build clarity with external parties; for example, creating information sheets for different stakeholders so that they know exactly whom to contact in any given situation. This way, the burden of bureaucratic confusion is reduced for everyone involved.

5. Encourage ownership

In all honesty, it can be difficult to give control away. However, it’s imperative to encourage autonomy if you want to accelerate speed and stimulate innovation. Giving your best teams a little more independence is a good place to start. Begin small: for instance, you could hand over the decision-making power for a small project, and work your way up from there. You must be willing to step out of the comfort zone to battle sluggishness, boost productivity, and spark innovation.

Spotify has done a great job of empowering their people, thus creating a smart culture that values agility and accountability. Each Spotify ‘squad’ owns a (visible) piece of the product, and is set up to be autonomous. The team is fully equipped to take local decisions and implement anything related to their own feature or component. This strategy has allowed Spotify to be agile and maintain their competitive advantage against giants like Apple and Google.

6. Don’t do away with all processes

The answer is not to simply do away with all processes and structure. What you really need to figure out is how to leverage the ones you need; the ones which enable efficiency, clarity and simplify tasks and decision making. The crux is really being able to make this distinction between what you need to keep and what you can do away with.

Andrew Hill, in his article, Business: How to topple bureaucracy, quotes Bob Sutton, Stanford professor and co-author of Scaling up Excellence, saying:

‘Over corporate history, the pendulum has tended to swing between centralised bureaucracies and more loosely controlled networks. The challenge is preventing processes ossifying into bureaucracy over time. A leader who does not continually look at subtracting unnecessary rules and procedures is like a gardener saying, “I only have to mow my lawn once”.’

Some say bureaucracy must die and give way to something else entirely, something brand-new. I disagree—I don’t think we’re quite there yet. With some ruthless self-examination, a sharp focus on specific problems, and the creation of smarter processes, we can find a balance. We can use our structures and processes help us maintain control, discipline, and consistency—without getting in the way of freedom, innovation, velocity, and ownership.

I look forward to hearing your perspectives on what we should be doing differently.

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Comments

Thanks for sharing detailed perils of bureaucracy and solutions to tackle it.

Add on one of the point above – I think information controls become challenge when an organisation gets bigger. With every managerial layer, need to cut information with separate and specific controls adds on. In such a scenario, there is a strong need to put smartest people in IT to develop and provide process-oriented systems. Organisation need to have operational information readily available instead of adding more manpower to manage just information.

Every effort to make decisions process-oriented instead of people-oriented would help an organisation cut bureaucracy, stay agile and boost growth. It makes more sense in operational functions such as supply chain, finance and sales.